How Small Banks Can Defend Their Place in the Payments Value Chain
Small banks can actively compete with large banks and fintechs that have been encroaching on their business.
Community banks and credit unions are the hub of consumer and business money management activity for SMB’s. However, the emergence of fintech disruptors, such as Stripe and Square, have changed that landscape and made it considerably more challenging for small banks to compete and thrive.
For example, fintechs such as Square have not only intruded on small to mid-sized banks payment and treasury management territory, but they have also begun offering their own credit cards or lending services with enticing rates, further eating up smaller banks’ market share. These new entrants are also disrupting the space with new technologies, such as online payment platforms, mobile payment apps, person-to-person (P2P) payments and payday apps, taking even more of the corner of the industry that small banks once dominated.
The good news is that small banks don’t have to fall victim to these trends. Implementing the right technology with the right partner can give small banks the services, speed and agility to offer one-stop banking and payment processing needed to remain competitive and defend their place in the value chain.
How the right partner can help
As a total payment solution provider, NMI provides a suite of powerful payment solutions to banks hoping to compete and establish stickier relationships with small business customers. Some of these solutions are as follows:
- White label—Small banks don’t have to refer payment business to a third-party provider. They can opt for a fully-featured turnkey payment solution and gateway able to be branded by a bank, like NMI, allowing small businesses to use the bank’s gateway to process payments. This enhances banks’ customer stickiness, by enabling the bank to provide the payment acceptance solution as their own.
- Agnostic gateway—Whereas some POS and payment providers lock merchants into their hardware, NMI is agnostic, giving merchants the freedom to select from thousands of processor and device combinations. With the speed of innovation taking place, NMI helps small businesses avoid getting locked into a single platform. Rather, payments can be easily rerouted to a different provider without any device disruption.
- Business intelligence—By processing all payments on a single platform, banks gain the ability to connect and analyze data to produce valuable insights for better, faster decision-making and monetization.
- Tech innovation—Small businesses are tech-savvy and demand that their banks offer technology innovations. This will only accelerate in 2021 and beyond. NMI dedicates time and resources to stay ahead of the technological curve, giving banks peace of mind that small business customers won’t feel the need to go outside the bank for anything financial.
- Cloud-based solutions—Traditional payment device integration requires a lot of time and development resources. Most SDKs are platform-specific, meaning banks have to build multiple versions of each integration, which leads to longer development cycles, more technical restrictions and more support. A platform-agnostic cloud API makes building EMV and contactless integrations very easy and provides an almost endless amount of choice.
- Full payments enablement—Fintechs, such as Square and Stripe, are making an all-out assault on the services traditional banks have with their small business customers. NMI’s payments solutions arm banks with all of the technology solutions necessary for banks to effectively combat this assault, and provide deeper relationship value to the banks’ customers.
A Change in Mindset
In order for banks to stay competitive in providing services to their valuable small business customers, banks must act now. Change and disruption will only accelerate. Banks’ ability to maintain market share will depend upon their ability to provide the competitive products and services that small business customers expect. NMI’s robust white-label payment solution set arms banks with the technology necessary for them to provide innovative payment solutions to protect their customer base.